Cartel Enforcement in Japan

Transcription

1 Cartel Enforcement in Japan Hideo Nakajima Secretary General, Japan Fair Trade Commission June 5, 2014 New York Bar Association, Global Cartels Program, New York

2 Illegal conducts prohibited by the Antimonopoly Act Private Monopolization Unreasonable Restraint of Trade (Price fixing cartel/ Bidrigging,etc.) Unfair Trade Practices Merger which may be substantially to restrain competition Supplementary Act Subcontract Act 2

3 Legal measures against violations of AMA etc. Conducts Private Monopolization Unreasonable Restraint of Trade (Price fixing cartel /Bid-rigging, etc.) Unfair Trade Practices Anticompetitive Merger Violation of Subcontract Act Legal Measures Cease and Desist Order Surcharge Payment Order Criminal Accusation Cease and Desist Order Surcharge Payment Order Criminal Accusation Cease and Desist Order Surcharge Payment Order* Cease and Desist Order Recommendation *Only certain types of Unfair Trade Practices 3

4 Prohibition of unreasonable restraint of trade in AMA Art.3 No entrepreneur shall effect private monopolization or unreasonable restraint of trade. Art.2 (6) The term "unreasonable restraint of trade" as used in this Act shall mean such business activities, by which any entrepreneur, by contract, agreement or any other concerted actions, irrespective of its names, with other entrepreneurs, mutually restrict or conduct their business activities in such a manner as to fix, maintain, or increase prices, or to limit production, technology, products, facilities, or customers or suppliers, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade. 4

5 Surcharge calculation rates Cartels and Bid-riggings Surcharge calculation rates Sales amounts of products in question during the period of violation (3 years at a maximum) = Sum of surcharges Normal Repeated violation/leading entrepreneur Early termination Manufacturing 10% (4%) 15%(6%) 8%(3.2%) Retail 3% (1.2%) 4.5% (1.8%) 2.4%(1%) Wholesale 2% (1%) 3% (1.5%) 1.6%(.8%) *Rates in case of medium and small enterprises in parenthesis Early termination means that the period of illegal acts is less than 2 years, and such acts are discontinued not later than one month before the commencement of investigations. Repeated violation means cases where surcharge payment orders have been given during the period of 10 years before the commencement date of investigation. Leading entrepreneur means entrepreneur who plays a leading role, such as organizer in bid-rigging, cartel, etc. 5

6 Cartels and Bid-riggings Criminal penalties Individuals Imprisonment with work of up to 5 years or fine of up to 5 million yen Entrepreneurs Fine of up to 500 million yen 6

7 Overview of leniency program in Japan 1st Applicant Initiation of JFTC investigation Before After 100% immunity 2nd Applicant 50% reduction 3 rd to 5 th Applicant 30% reduction 30% reduction Up to 3 Applicants 30% reduction Criminal accusation NOT filed by JFTC (Applicant firm and its individuals) Up to 5 applicants 7

8 Requirements of leniency program in Japan(1) For immunity The first firm to come forward before the first day of the investigation Not commit the relevant violation on or after the first day of the investigation For reduction 2nd to 5th firm to individually report to JFTC Not commit the relevant violation on and after the first day of the investigation for pre-investigation applicants, or on and after the reporting date for post-investigation ones Submit reports and documents unknown to JFTC (for 4 th and 5 th applications before the investigation begins, or for applications after the investigation begins) Report is due the twentieth day from the first day of the investigation (for applications after the investigation begins) Maximum Number of Applications after the investigation begins : Three (but The total of applications including before and after the investigation are limited to no more than 5) 8

9 Requirements of leniency program in Japan(2) Both for immunity and reduction Form No.1 (for pre-investigation) and Form No.3 (for postinvestigation) must be transmitted only in facsimile ( from overseas, but Japanese language only) Reports and documents submitted not contain false information Submit reports or materials responding to JFTC's additional requests Not coerce others to commit the infringement or block others from ceasing Not disclose the fact of application to third parties without justifiable reasons 9

10 Implementation of leniency program in Japan Many applications Variable sources of information Increases of surcharge imposed Effective compliance program Enhanced Inter-agency cooperation 10

11 Recent Enforcement by JFTC Number of Cease and Desist Orders Change in Number of Cease and Desist Order FY2011 FY2012 FY Number of Subject Parties Amount of Surcharges (100 million yen) Change in the Surcharge Amount (*Amounts less than 1 million yen are omitted) FY2011 FY2012 FY Number of Subject Parties Price Cartel/Bid rigging Number of Subject Parties Others Surcharge Payment Order Number of Subject Parties Decision on Surcharge Payment Order Decision on Surcharge Payment Order 11

12 Recent international cartel enforcement by JFTC 1. Auto parts Total surcharge amount: Approx billion yen** Type of Auto Parts Violators Surcharge Amounts* (million yen) Wire harness Yazaki Corporation 9,607 Sumitomo Electric Industries Ltd. 2,102 Fujikura Ltd. 1,182 Furukawa Electric Co., Ltd. Immunity Generators and starters Mitsubishi Electric Corporation 1,410 Starters, windshield and wiper systems Mitsuba Corporation 1,108 Radiators and electrical fans T.RAD Co., Ltd. 672 Radiators and electrical fans Calsonic Kansei Corporation 198 Headlamps and rear combination lamps KOITO MANUFACTURING CO., LTD. 3,428 ICHIKOH INDUSTRIES, LTD. 1,250 Stanley Electric Co., Ltd. Immunity *Amounts less than 100 thousand yen are omitted. **It includes surcharge for cartel of industrial machinery bearings. 12

13 Type of Auto Parts Violators Surcharge Amounts* (million yen) Bearing (automotive and industrial machinery) 1. Auto parts (continued) Total surcharge amount: Approx billion yen** NTN Corporation 7,231 NSK Ltd. 5,625 NACHI-FUJIKOSHI CORP. 509 JTEKT Corporation Immunity **It includes surcharge for cartel of industrial machinery bearings. 2. International ocean shipping services for cars Total surcharge amount: Approx billion yen Violators Surcharge Amounts* (million yen) Nippon Yusen Kabushiki Kaisha 13,101 Kawasaki Kisen Kaisha, Ltd. 5,698 Wallenius Wilhelmsen Logistics, AS 3,495 Nissan Motor Car Carrier Co., Ltd. 423 Mitsui O.S.K. Lines, Ltd. Immunity *Amounts less than 100 thousand yen are omitted. 13

14 Flowchart of procedures of AMA for handling cartels and bid-riggings Detection by JFTC Report from Public Administrative investigation Advance notification (Cease and Desist order) Advance notification (Surcharge payment order) Opportunity to present views and to submit evidence Opportunity to present views and to submit evidence Cease and desist order Surcharge payment order Hearing Procedures Tokyo high court Supreme court Submission base on Leniency Program Compulsory investigation for criminal cases File an accusation with the Prosecutor General The Prosecutor General prosecutes the case District court Tokyo high court Supreme court 14

15 Outline of the Amended Antimonopoly Act The JFTC s hearing procedure for administrative appeal is to be abolished, and appeals against administrative orders issued by the JFTC (cease and desist orders, etc.) is to be heard at the Tokyo District Court as appeal suits. Notification procedures prior to issuing an administrative order by the JFTC is to be further developed. 1. Abolition of Hearing Procedure and Preparation of Court Proceedings pertaining to Cease and Desist Orders, etc. (1) Abolition of the Hearing Procedure 1 The JFTC s hearing procedure for administrative appeal is to be abolished. (Article 52 to Article 68 and other relevant provisions of the current act) 2 The substantial evidence rule is to be abolished. (Article 80 of the current act) 3 Restriction on offering new evidence is to be abolished. (Article 81 of the current act) (2) Preparation of Court Proceedings pertaining to Cease and Desist Orders, etc. 1 The first instance functions to be transferred to a district court (Article 85 of the amended act ) 2 Ensuring the expertise of the court (concentration of jurisdiction in the Tokyo District Court) (Article 85 of the amended act ) 3 Ensuring careful examination at the court (Articles 86 and 87 of the amended act ) 15

16 2. Development of Advance Notification Procedures pertaining to Cease and Desist Orders, etc. (1) Development of advance notification procedures presided over by an officer designated by the JFTC (Article 49 and following articles of the amended act ) 1 Presiding officer of advance notification procedures (Article 53 of the amended act ) 2 Explanations by investigators, etc (Article 54, Paragraph 1 of the amended act ) 3 Appointment of representative (Article 51 of the amended act ) 4 Presentation of opinions, questions to investigators, etc. at hearings (Article 54, Paragraph 2 of the amended act) 5 Preparation of records/reports by designated officers (Articles 58 and 60 of the amended act ) (2) Inspection and copy of evidence to facts found by the JFTC (Article 52 of the amended act ) 1 Inspection of evidence 2 Copy of evidence 3. Supplementary Provisions The investigation procedures of the JFTC is to be considered from a point of view to ensure that a party concerned with a case defends itself, maintaining consistency with other administrative procedures in Japan. The government is to aim at drawing the conclusion of the consideration within one year in principle from the promulgation of the amended act and is to take appropriate measures as necessary. 16

17 procedures prior to final administrative order Revisions of the procedures prior to issuing final orders and the appeal procedures current procedure Investigation by the JFTC Notification by the JFTC (expected content of order, etc.) Explanation by the JFTC (expected content of order, fact findings, evidence, etc.) Opportunity for recipients to express opinions and to offer evidence Commission meeting Outline of the Revision <procedures prior to issuing final orders> Improving sufficiency and transparency of the procedure Inspection and copy of evidence which proves facts found by the JFTC is to be sanctioned. Note: recipient is to be allowed to copy only its own property and the written statements of its employees. Introduction of the advance notification procedures presided over by an officer designated by the JFTC. Asking of questions and oral presentation of opinions will be allowed in the advance notification procedures. Abolition of the hearing procedure for administrative appeal Addressing the criticism that the JFTC plays the role of both prosecutor and judge in the current JFTC hearing procedure procedures prior to final administrative order New procedure Investigation by the JFTC Notification by the JFTC (expected content of order, etc.) Advance notification procedures (presided over by an officer designated by the JFTC) Explanation by investigators (expected content of order, fact finding, evidence, etc.) Question from recipient Presentation of opinions (Oral/ written) and offer of evidence by recipient Commission meeting Inspection of evidence and copying recipient s own property and the written statements of its employees Appeal procedures Cease and desist order/ Surcharge payment order Hearing procedure for administrative appeal Tokyo High Court The JFTC The court <Appeal procedures> Introduction of the trial at the District Court Only Tokyo District Court has jurisdiction over the appeal suit pertaining to the cease and desist order/surcharge payment order as the court of first instance (ensuring expertise in the court.) Panel of three judges hears the case in Tokyo District Court (a five-judge panel may be set.) Appeal procedures Cease and desist order/ surcharge payment order Tokyo District Court Tokyo High Court The court Supreme Court Setting a panel of five judges is to be allowed in Tokyo High Court when the court hears the case. Abolition of the substantial evidence rule and the restriction on offering new evidence. Supreme Court 17